Democracy has been historically linked with a commercial capitalist economy.
Although a form of democracy existed in some tribal societies,
1 democracy as
we know it emerged in ancient Greece, and then Rome, disappeared during the
Dark Ages (and the Byzantine period), reemerged in Renaissance Italy and
Hanseatic Germany, and finally burst forth in its modern form in Enlightenment England, Holland, France, and the United States. In all of these historical cases,
a trade capitalist commercial economy paralleled the establishment of the democratic polity. In the nineteenth and twentieth centuries, of course, industrial
capitalism came to undergird democratic institutions. The transition from trade
capitalism to industrial capitalism is one of the remarkable events of history,
generating libraries of theories, controversies, and descriptions.
2 However, the
link between industrial capitalism and legal democracy (or, as Marx referred to
it, bourgeois democracy) is not controversial. Marxists, classical capitalist economists, even monarchists accepted the link between industrial capitalism and
parliamentary democracy, while alternately rejecting parliamentary democracy
as too oligarchic ( Marx), too democratic (the monarchists such as Ortega y
Gasset),
3 or perfect (the American federalists).
4

What are the structural factors engendered by capitalism that produce the
conditions conducive to democracy? The major causal factors structurally inherent to capitalism are: the separation of the economy from the control of the
state, the establishment of contract law as a feature of business interactions, and
the emergence of the rational worldview, emanating from the calculation of
money in business transactions. The separation of the economy from state control
led to the political ideal of the power-limited state with tenure-limited leaders.
The establishment of contract law became extended from business to criminal
law and eventually into political, or constitutional law. At the same time, the

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